Australian Broker Call

Macquarie rates AGI as Neutral (3) -

Feedback from casino operators and competitors suggests the company's North American business can deliver growth in sales and participation. Macquarie also observes Australian ship share looks to have stabilised although game performance is yet to recover.

In order for the stock to trade at in a premium, Macquarie suggests investors would need to witness an improvement in new game performance to drive gains in market share.

Rating is Neutral. Target is raised to $2.36 from $2.22.

Target price is $2.36 Current Price is $2.50 Difference: minus $0.14 (current price is over target).
If AGI meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.11, suggesting downside of -14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates ALL as Buy (1) -

Deutsche Bank observes the company has continued to gain share in the North American gaming operations in for-sale segments as well as the VGT Class 2 segment.

This growth is expected to continue with the release of Dragon Link in October and the entry into the Class 3 stepper, VLT and Washington markets through 2018. Class 2 video has been stronger than expected and the broker suspects digital could provide some upside risk.

The broker retains a Buy rating and $27.50 target.

Target price is $27.50 Current Price is $21.49 Difference: $6.01
If ALL meets the Deutsche Bank target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $24.44, suggesting upside of 10.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates ALL as Outperform (1) -

Macquarie upgrades forecasts by 6% and 17% for FY17 and FY18 respectively with a change in covering analyst.

The broker notes Aristocrat has reduced its reliance on volatile and lumpy outright sales through growth in higher quality recurring earnings in recent years.

This transformation has also significantly improved cash flow, the broker observes. Target price is $23.30. Outperform.

Target price is $23.30 Current Price is $21.49 Difference: $1.81
If ALL meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $24.44, suggesting upside of 10.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates AMP as Upgrade to Outperform from Neutral (1) -

Credit Suisse observes the share price has underperformed the market by around -10% since the first half result. The broker believes the share price has been affected by an expectation of cost savings and a large capital return.

The company's buyback was disappointing, the broker acknowledges, as it was not completed. Still, Credit Suisse supports the company's honest approach to communications and expects value to be eventually realised.

Rating is upgraded to Outperform from Neutral.Target is $5.60.

Target price is $5.60 Current Price is $4.79 Difference: $0.81
If AMP meets the Credit Suisse target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $5.56, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates AQZ as Initiation of coverage with Buy (1) -

Ord Minnett initiates coverage on Alliance Aviation with a Buy rating and $1.65 target. The company is an operator of charter air services in Australasia with 29 aircraft in active service.

Going forward, the broker believes a growing partnership with Virgin Australia ((VAH)) could be a game changer, with increased utilisation of the existing fleet likely to lead to significant growth in earnings.

Target price is $1.65 Current Price is $1.29 Difference: $0.365
If AQZ meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates ASB as Accumulate (2) -

Austal is awarded contracts for two high-speed trimaran ferries for Fred Olsen SA and an additional littoral combat ship for the US Navy.

Apart from incremental contracts being awarded, Ord Minnett envisages the next major catalyst for the stock is the Australian government's offshore patrol vessel contract. Austal's JV is one of the three competing bidders for the project.

Accumulate rating retained. Target is $2.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $2.00 Current Price is $1.75 Difference: $0.25
If ASB meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates BOQ as Hold (3) -

Deutsche Bank forecasts a stronger second half ahead of the results on October 12. Among key underlying trends, the broker anticipates growth in the balance sheet and an increase in net interest margin by around 50 basis points half on half.

Asset quality remains benign which leads Deutsche Bank to increase cash net profit forecasts slightly (1%). Hold rating retained. Target rises to $11.80 from $11.70.

Target price is $11.80 Current Price is $12.96 Difference: minus $1.16 (current price is over target).
If BOQ meets the Deutsche Bank target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.01, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates CSL as Buy (1) -

UBS observes weakness in a competitor has again delivered upside to CSL. Sales of the company's Haegarda for hereditary angioedema have been materially boosted in the US and EU because of another shortage of a rival's product, which has persisted since June.

CSL has advised patient groups that Haegarda production is not able to supply the gap left in the market. UBS suspects outperformance relative to FY18 net profit guidance and its forecast is capped by the company's ability to respond to the additional demand.

Buy and $141.00 target maintained.

Target price is $141.00 Current Price is $136.58 Difference: $4.42
If CSL meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $137.77, suggesting upside of 1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates LOV as Equal-weight (3) -

Morgan Stanley believes the company is in a strong position versus its Australian-listed retail peers as around 50% of its stores are offshore and there is a significant opportunity to roll out stores in new markets.

Nevertheless, operating earnings margins are at an all-time high and historically volatile, which the broker believes poses a risk.

Equal-weight rating and In-Line industry view maintained. Target is raised to $5.05 from $4.05.

Target price is $5.05 Current Price is $5.13 Difference: minus $0.08 (current price is over target).
If LOV meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.10, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates MFG as Neutral (3) -

Around $1.55bn has been raised for the Magellan Global Trust, in line with expectations. The company has reported first quarter funds under management were up 1.9%, driven by positive net flows and markets.

Credit Suisse believes the stock offers better value than it has in the past but expects net flows to slow from this juncture.

Neutral and $27 target retained.

Target price is $27.00 Current Price is $25.47 Difference: $1.53
If MFG meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $27.16, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.2

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates MTR as Downgrade to Neutral from Outperform (3) -

The company has received a proposal from Accor at $3.96 a share. Credit Suisse calculations suggest around 5.5% earnings accretion to the bidder which, however, factors in no synergies.

The broker also does not envisage alternative bidders having the same ability to extract value. Rating is downgraded to Neutral from Outperform and the target raised to $3.95 from $3.15, in line with the proposal.

Target price is $3.95 Current Price is $3.76 Difference: $0.19
If MTR meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.55, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates MTR as Hold (3) -

The company has received an indicative cash proposal from Accor at $3.96 a share. The proposal is subject to due diligence and the board remains engaged with Accor.

Deutsche Bank observes the bid follows a challenging 18 months for the company and, while not ruling out a competing bid, considers Accor uniquely positioned amongst the hotel majors to manage the properties.

Deutsche Bank retains a Hold rating. Target is raised to $3.96 from $3.10.

Target price is $3.96 Current Price is $3.76 Difference: $0.2
If MTR meets the Deutsche Bank target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.55, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates MTR as Downgrade to Equal-weight from Overweight (3) -

The company has received an indicative proposal from Accor at $3.96 a share. Morgan Stanley expects the stock will now trade on sentiment regarding an acquisition as opposed to fundamentals.

As a result, the rating is downgraded to Equal-weight from Overweight. Industry view is: In-Line. Target is raised to $3.96 from $3.40.

Target price is $3.96 Current Price is $3.76 Difference: $0.2
If MTR meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.55, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates MTR as Buy (1) -

The company has received an indicative, non-binding proposal from Accor at $3.96 cash per share. The preliminary offer is $4.02 per share less the final FY17 dividend that has already been paid and including a potential special dividend.

 Mantra has granted access to due diligence to determine if the transaction can be agreed. Buy rating and $3.20 target retained.

Target price is $3.20 Current Price is $3.76 Difference: minus $0.56 (current price is over target).
If MTR meets the UBS target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.55, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates PRY as Neutral (3) -

Citi considers consensus net profit estimates of $97m as overly optimistic (Citi $93m) given the structural challenges in medical centres and rising costs of pathology collection centres.

The loss from the second half of FY18 of high-margin cancer screening contracts, worth $30m pa, appears to the broker to have not driven revisions to more optimistic forecasts.

Citi maintains a Neutral rating and reduces the target to $3.30 from $3.70.

Target price is $3.30 Current Price is $3.20 Difference: $0.1
If PRY meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.59, suggesting upside of 13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates QBE as Sell (5) -

QBE has revealed the impact of the recent hurricane and earthquake activity, increasing its large catastrophe and risk allowance by a pre-tax US$600m for 2017.

Deutsche Bank does not expect a wide-scale rate hardening on the back of recent events. QBE is expected to remain profitable in 2017 and continue with its on-market buyback.

Nonetheless, the broker believes the company is overly complex and does not cover its cost of capital. As it is trading above book value, the broker rates the stock Sell. Target is $10.00.

Target price is $10.00 Current Price is $10.43 Difference: minus $0.43 (current price is over target).
If QBE meets the Deutsche Bank target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.35, suggesting upside of 10.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.1

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates RWC as Hold (3) -

Morgans investigates the competitive threat posed by Apollo Tectite, which has replaced the company's SharkBite PTC fittings in Home Depot stores in the north west of the US.

The broker found no plumbing representatives consulted spoke ill of Apollo Tectite. While Reliance dominates the market in brass PTC fittings Morgans believes the ongoing relationship with Home Depot, its largest customer, is a key risk.

Hold rating and $3.60 target retained.

Target price is $3.60 Current Price is $3.72 Difference: minus $0.12 (current price is over target).
If RWC meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.75, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates SLC as Add (1) -

Morgans updates its numbers to reflect the recent placement and assumes a total of $27.5m in new equity is raised. The broker also assumes this will be used to pay down debt.

The broker continues to believe the company can deliver attractive returns from its asset base, having delivered 165% organic revenue growth in Singapore, and expects Hong Kong to follow suit.

Add retained. Target is $2.81.

Target price is $2.81 Current Price is $2.33 Difference: $0.48
If SLC meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates WOR as Underperform (5) -

The company has acquired Amec FW UK, which is involved in North Sea maintenance, modifications and operations. The deal will be funded by a $322m equity raising and incremental debt.

Credit Suisse expects that, despite the region being a very mature area, earnings should be stable. While the deal requires some more balance sheet strength, the broker questions, at this stage, whether it adds value.

Credit Suisse remains of the view that the stock is expensive and retains a target of $9.50. Rating is Underperform.

Target price is $9.50 Current Price is $14.24 Difference: minus $4.74 (current price is over target).
If WOR meets the Credit Suisse target it will return approximately minus 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.55, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates WOR as Buy (1) -

WorleyParsons will acquire Amec FW's UK North Sea operations, to be divested as part of the merger with Wood Group.

Deutsche Bank likes the transaction, believing WorleyParsons is acquiring the business at an attractive multiple. The enterprise value is GBP182m.

Buy rating maintained. Target rises to $16.67 from $16.47.

Target price is $16.47 Current Price is $14.24 Difference: $2.23
If WOR meets the Deutsche Bank target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $13.55, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates WOR as Outperform (1) -

The company has acquired AmecFW UK oil and gas assets, a divestment required as part of the Amec merger with John Wood Group. The acquisition price is GBP182m and is expected to be accretive in the first full year.

Macquarie observes this gives WorleyParsons a leading capability in the UK North Sea maintenance, modifications and operations market. It increases the company's exposure to this market to 18% of sales versus 7% previously. The broker considers the acquisition strategically sensible and reasonably priced.

Outperform rating. Target is raised to $14.31 from $13.81.

Target price is $14.31 Current Price is $14.24 Difference: $0.07
If WOR meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $13.55, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates WOR as Overweight (1) -

The company has acquired AmecFW UK, to be funded by the way of a $322m capital raising at $13 a share.

Morgan Stanley considers the transaction opportunistic, given the business is being divested to meet competition concerns as a result of the merger with John Wood Group.

Overweight rating retained. Industry view is Cautious. Price target is $12.52.

Target price is $12.52 Current Price is $14.24 Difference: minus $1.72 (current price is over target).
If WOR meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $13.55, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources